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There's A Lot To Like About Vallourec's (EPA:VK) Upcoming €1.50 Dividend

Simply Wall St · 05/21 04:33

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Vallourec S.A. (EPA:VK) is about to trade ex-dividend in the next 4 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Vallourec's shares on or after the 26th of May, you won't be eligible to receive the dividend, when it is paid on the 28th of May.

The company's next dividend payment will be €1.50 per share, and in the last 12 months, the company paid a total of €1.50 per share. Calculating the last year's worth of payments shows that Vallourec has a trailing yield of 8.9% on the current share price of €16.87. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

Our free stock report includes 1 warning sign investors should be aware of before investing in Vallourec. Read for free now.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. It paid out 76% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings.

Check out our latest analysis for Vallourec

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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ENXTPA:VK Historic Dividend May 21st 2025

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Vallourec's earnings have been skyrocketing, up 76% per annum for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Vallourec has seen its dividend decline 26% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

To Sum It Up

Has Vallourec got what it takes to maintain its dividend payments? Earnings per share are growing at an attractive rate, and Vallourec is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Vallourec more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Vallourec has 1 warning sign we think you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.